price / prīs/ • n. the amount of money expected, required, or given in payment for something: land could be sold for a high price | a wide selection of tools varying in price. ∎ fig. an unwelcome experience, event, or action involved as a condition of achieving a desired end: the price of their success was an entire day spent in discussion. ∎ the odds in betting. ∎ archaic value; worth: a pearl of great price. • v. [tr.] (often be priced) decide the amount required as payment for (something offered for sale): the watches in this range are priced at $14.50. PHRASES: at any price no matter what expense, sacrifice, or difficulty is involved: they wanted peace at any price. at a price requiring great expense or involving unwelcome consequences: his generosity comes at a price. beyond (or without) price so valuable that no price can be stated. a price on someone's head a reward offered for someone's capture or death. price oneself out of the market become unable to compete commercially. put a price on determine the value of: you can't put a price on what she has to offer. what price ——? used to ask what has become of something or to suggest that something has or would become worthless: what price justice if he were allowed to go free?
price, amount of money for which a unit of goods or services is exchanged. Price is equivalent to market value and may or may not measure the intrinsic value of the goods or services to the buyer or seller. Most economists hold that, in the long run, price in a competitive market will equal the cost of production. Such a long-term equilibrium price is called the normal price. In the short run, however, the market price will be determined by supply and demand without reference to cost. The price of an individual item changes with time as well as in its relation to the prices of other goods. In general, prices are closely related to the amount of currency in circulation. If money is plentiful compared with the supply of goods, prices are high and money has less value and is "cheap" ; when the opposite condition prevails, goods are cheap and money has greater value and is "dear." The general price level may therefore be influenced by the action of government agencies (such as, in the United States, the Federal Reserve Board) that regulate the supply of currency. Because of the relation of the general price level to the business cycle, government action is usually designed to steer a middle course between the inflationary effects of a too plentiful currency and the deflationary effects of a glut of goods. Stabilization of prices would ensure that the dollar used in repaying a loan would have the same value as the dollar borrowed. The price level is an average of prices of a number of commodities that are important in the economy. It is generally converted into an index, with a particular year designated as the norm and given a value of 100. By comparing the value of an index at different dates, it is possible to ascertain whether prices are rising or falling. Common indexes used by U.S. government economists include the consumer price index and the wholesale price index. Historically, prices have tended to move upward; the wholesale price index, for example, more than doubled between 1930 and 1970. For the history of prices, classic works are Thomas Tooke, A History of Prices … . from 1793 to 1856 (6 vol., 1838–57; repr. 1928) and J. E. T. Rogers, A History of Agriculture and Prices in England (7 vol., 1866–1902; repr. 1963).
Price is the monetary value of a good or service for sale. There are several different kinds of price. Those with the most dominant roles in the marketplace include market price and equilibrium price. Both are tied to the laws of supply and demand.
The market price is the price consumers pay for goods or services in the marketplace. The equilibrium price is an economic ideal. It is the point where the supply of goods is matched equally by consumer demand. For example, if there are more bicycles on the market than there are consumers to buy them, it will create a surplus on the market and the market price of bicycles will go down. If there are more people wanting to buy bicycles than there are bicycles available for purchase, the market price will go up because of the higher demand. When the number of bicycles produced equals the demand from consumers, that is the equilibrium price.
Market price is thus affected by consumer demand and the production rates and availability of a good or service. Ideally, the market price will not be far off from the equilibrium price. Prices for goods or services are subject to change according to consumer demand and producer supply. Price can not be permanently set in a free market system where supply and demand are constantly changing.
See also: Money, Supply and Demand